Kaiser lowers rate increases for small businesses

Kaiser Permanente has retroactively rolled back rate increases that went into effect for small businesses on July 1 by 1.2 percent.

The welcomed — albeit small — bit of news for thousands of California enrollees comes after a bit of wrangling with the state regulators.

Kaiser in April had proposed a 10.7 percent rate hikes for the bulk of its small business customers. The state Department of Managed Health Care, armed with a new law that allows them to scrutinize actuarial data behind the rate filings, pushed back.

“We’ve been concerned about the lack of data they provided to support their trends and we requested they reduce their rates,” said department spokeswoman Lynne Randolph.

The new increase of 9.5 percent translates into a total savings of $13.5 million, Randolph said. “We believe thousands of people in small businesses are going to benefit from this,” she said. “It shows the rate review process can be effective.”

The department estimates about 190,000 enrollees will be affected. The National Union of Healthcare Workers, which is involved in a labor dispute with Kaiser and has pushed for insurance rate regulation, contends the numbers are much higher once dependents are factored in. The union estimates the rate change will affect more than 300,000 members for a total savings of as much as $30 million.

Kaiser officials, meanwhile, still stand by their original rate increase.

They say the HMO is different than traditional health insurers that pay claims because they are an integrated system that combines a health plan with the network of hospitals and doctors so their actuarial data just looks different than other plans.

Kaiser spokesman John Nelson said they tried to explain that to the department but eventually just decided to offer up a reduced rate increase.

“We wanted to move forward,” Nelson said. “We both have more work to do and we have more work to explain our information.”